Four East Bay redevelopment agencies under scrutiny by state controller

Four East Bay redevelopment agencies, including three in Contra Costa County, are targeted in a statewide review of 18 agencies announced Monday by the office of Controller John Chiang.

Redevelopment agencies in Hercules, Pittsburg, Richmond and Fremont will be scrutinized for their use of redevelopment money and compliance with laws, but the auditors also will be looking at big cities such as San Jose and Los Angeles, and rural agencies.

Earlier this month, Gov. Jerry Brown voiced concern that redevelopment agencies siphon money from schools as well as from cities and counties. The governor's office announced plans to disband about 400 redevelopment agencies statewide to help plug a $28.1 billion hole in the state's budget.

Last week, more than 100 mayors and city council members from across the state rallied in Sacramento to protest the plan, arguing that redevelopment agencies create jobs and eliminate blight, especially in poor communities.

"The heated debate over whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on anecdotal evidence," Chiang said in a news release. "As lawmakers deliberate the governor's proposal to close RDAs and divert those funds to local schools and public safety agencies, I believe it is important to provide factual, empirical information about how these agencies perform and what they bring to the communities they serve."

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The review is expected to be completed by early March.

The Hercules, Pittsburg and Richmond redevelopment agencies are among seven in California that, as of December, had not paid their obligations to the Supplemental Educational Revenue Augmentation Fund, part of a statewide $1.7 billion shift of redevelopment agency property taxes to schools in the 2009-10 fiscal year. Hercules owed $4.9 million, Pittsburg owed $17.4 million and Richmond owed $10.1 million. Two of the other four nonpayers -- Parlier in Fresno County and Placentia in Orange County -- also are among the 18 agencies targeted by the statewide review.

Controller's spokesman Jacob Roper said Monday that nonpayment of the education fund obligations did not factor in the choice of agencies to be reviewed.

"We're wanting to get a sample from across the state in terms of population and geography," he said.

He added that for purposes of efficiency and speed, the Controller's office clustered some of its choices, picking several in the Bay Area and the Los Angeles area, among other clusters.

The state review will examine how the agencies define a "blighted" area, whether they pay for low- and moderate-income housing as required by law, and whether they accurately "pass through" payments to schools within their community. The review will also scrutinize how much RDA officials, board members and employees are compensated for their services, according to the news release.

In the East Bay, Hercules has come under increased scrutiny recently after a former interim city manager said its redevelopment agency lacked the funds to pay all of its bond and other obligations. City officials also have been criticized for high payments to consultants.

Pittsburg has announced that it does not have the money to pay its education fund obligation and that it was not planning to begin any new redevelopment projects in the near future.

Richmond is seeking to work out a payment plan with the state for its Supplemental Educational Revenue Augmentation Fund obligation.

Fremont's inclusion in the audit comes one week after the city raced through the authorization of as much as $140 million in redevelopment bonds, primarily to fund construction of a BART station.

The city's redevelopment agency has focused primarily on major infrastructure projects improving freeway interchanges and paving the way for BART to extend southward through the city.

It also has fulfilled its mandate to subsidize several affordable housing projects, but has so far failed to spur development on a long-vacant 6-acre parcel despite proposing more than $20 million in subsidies to private developers.

The 18 agencies that the state will review are the counties of Sacramento and Riverside, and the cities of Anderson, Calexico, Citrus Heights, Coronado, Desert Hot Springs, Hercules, Fremont, Fresno, Los Angeles, Palm Desert, Parlier, Pasadena, Pittsburg, Placentia, Richmond and San Jose.